Maruti Suzuki gains 4% on hopes the hike in diesel prices on Thursday would reduce chances of the government reducing its subsidy burden by imposing duties on diesel vehicles, which some investors had feared.
Although the incremental hikes in diesel prices could eventually shift consumers towards petrol models, analysts said in the near-term the measures should not dent sales of diesel models.
"Maruti is building up a capacity of additional 3 lakh (300,000) diesel engines, which will help it to assemble 7 lakh diesel cars by end of FY14," said Abhishek Gaoshinde, an analyst tracking the sector at Sunidhi Securities.
